The regional loyalty tax: households miss out on savings of over £400 a year

THE REGIONAL LOYALTY TAX: HOUSEHOLDS MISS OUT ON SAVINGS OF OVER £400 A YEAR

BY FAILING TO SWITCH ENERGY AND INSURANCE

• The West and East Midlands could save the most of any UK region from switching energy, home and car insurance.
• The average amount that could be saved from switching energy, home and car providers is £580.
• When asked how much they would have to be able to save in order to be incentivised to switch provider, the average amount is £224, far lower than the actual savings available.
• The North East has the lowest proportion of households who have switched at least one of their providers in the last year.

24 July 2019 – Households are missing out on savings of over £400 by failing to switch the energy, home and car insurance providers. Research from comparethemarket.com has shown that the top three regions where households can save the most by switching are the West Midlands (£732), the East Midlands (£665) and the North East (£660).

The insight from The Simples Lab calculates the cost saving it would take to incentivise consumers to seek out and change to a more competitive deal. In other words, what is the “tipping point” consumers say they would have to save in order for them to believe switching is worth their while.

The study reveals that the cost saving it would take to incentivise consumers to seek out and change to a more competitive deal is far lower than the potential savings available.

The West Midlands have the potential to save an average of £732 by switching motor, home and energy providers. Despite being £498 more than the amount they say it would take to switch (£234), 61% have not switched any of their providers in the last year.

Those in the East Midlands could also reap huge benefits from switching, with an average of £665 in savings available. This is £456 greater than their “tipping point” (£208), however 60% of households have still not taken advantage of these potential savings by switching.

In the North East, households can make an average of £660 in savings by switching – one of the highest figures in the UK. The region tops the chart with an extra £499 of savings available on top of what they say it would take to switch (£211). Despite this, the region has the highest proportion of those who have not switched providers, at 71%.

Those in the South West could save an average of £624, £414 greater than the “tipping point” at which households say they would switch (£210). Potential savings again surpass this tipping point by a considerable amount, yet only 35% of South West households have switched provider in the last year.

The report reveals on average Londoners can save £568 . This saving is £269 more than the £299 Londoners say it would take them to switch. London also ranks one of the most inert regions as only 31% of households have switched.

Households in the South East are among those who could save the most (£315) above their “tipping point” (£242), despite having the second highest “tipping point”. The South East is a prime example of a region which can save the most by switching often requiring the highest incentive to do so. The South East also one of the most inert regions, with only 35% of households having switched energy provider.

Simon McCulloch, Director at comparethemarket.com, said:

“All across the country people are missing out on hundreds of pounds in savings, despite the fact that they say they would switch providers for a lot less money. We call this group “actively inert” – despite being able to save in excess of the amount which would be their incentive to switch, they still don’t shop around.

 “The difference between comparing providers and simply rolling onto a default tariff or auto-renewing your insurance can be huge. Shopping around on energy tariffs, as well as motor and home insurance, is one of the most effective ways of combating rising household costs, yet the majority of people are still not taking advantage of these potential savings.”

 To read the full report, including a breakdown by product across motor, home and energy please click here.